1. What is Car Loan Interest?

Car loan interest in Singapore is typically calculated monthly based on the principal amount and annual interest rate. The interest represents the cost of borrowing money to purchase a vehicle.

2. How Does the Calculator Work?

The calculator uses the formula:

Where:

• \( principal \) — Original loan amount (SGD)
• \( r \) — Annual interest rate (in decimal form)

Explanation: The annual rate is divided by 12 to get the monthly rate, which is then multiplied by the principal amount.

3. Importance of Interest Calculation

Details: Understanding your monthly interest payment helps in budgeting and comparing different loan options. In Singapore, car loans typically have higher interest rates than housing loans.

4. Using the Calculator

Tips: Enter the principal loan amount in SGD and the annual interest rate in percentage (e.g., 2.5 for 2.5%). All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: Is this calculation specific to Singapore?
A: Yes, this calculation follows the standard method used by banks in Singapore for car loans.

Q2: Does this include other fees?
A: No, this only calculates the interest portion. Additional fees like processing fees or insurance are not included.

Q3: What's the typical car loan interest rate in Singapore?
A: Rates vary but typically range from 2.5% to 4% annually for new cars, and higher for used cars.

Q4: How does loan tenure affect total interest?
A: Longer tenures mean more total interest paid, even if monthly payments are smaller.

Q5: Can I use this for other types of loans?
A: This formula works for simple interest loans, but many loans use more complex amortization formulas.